Irma Olguin Jr. and Jake Soberal appeared in federal court Thursday on charges of conspiring to commit wire fraud and taking over $100 million from individual and institutional investors.
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The two entered not-guilty pleas and were released on conditions including giving up their passports, limited travel, and unspecified bonds that included the equity of Olguin's mother's house and Soberal's home.
Anger and tension filled the halls of the federal court as laid-off Bitwise employees confronted the former CEOs after the hearing.
"Each one of us loved our community and you took us down!" one former employee yelled at Olguin and Soberal.
Federal investigators allege the co-CEOs' fraud began no later than January 2022.
Bitwise founders federally charged in $100 million fraud scheme, began months earlier
"In our complaint, we allege that they swindled investors out of tens of millions of dollars by repeatedly lying about Bitwise's key financial metrics," said Monique Winkler, Regional Director of the Securities & Exchange Commission.
Court documents reveal bank statements where Olguin and Soberal showed investors they had $40 million in their account in December 2021 when in reality, they only had $11 million.
The documents also show a chart that reveals despite the company gaining millions of dollars in investments by June 1st of this year, Bitwise had less than $1,500,000 left.
"The SEC alleges that Soberal and Olguin told these lies because they knew that investors would not have invested in Bitwise if they knew the truth about its poor financial condition," Winkler explained.
RELATED: What is Bitwise? Explaining the rise and fall of the Fresno-based tech company
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US Attorney Phillip Talbert says altered audits were also used in an attempt to secure an additional $5 million from an investor.
"This wasn't one simple lie, this was a series of lies backed up with false documentation in order to get all this money," Talbert said.
The money is said to have been used for paying Bitwise's payroll and fringe benefits, including Olguin, Jr. and Soberal's $600,000 per year salaries, outfitting the company's office spaces, and repaying debts owed to prior lenders.
The issues didn't come to light until May 2023 when the company abruptly laid off all of the employees and informed them their latest paychecks would likely bounce, leaving hundreds without three weeks of pay and no job.
"I think it's about time they were charged but I think that there's a lot more to it," said Roger Bonakdar, the attorney representing laid-off Bitwise employees.
Bonakdar represents a number of former Bitwise employees in a class action lawsuit, which he served Olguin in court Thursday.
He says for his clients, the charges are a step in the right direction, but it was rough to see both Olguin and Soberal walk out of the courthouse.
"They didn't have to get booked, they weren't processed, they showed up to court and went home, whereas some of my clients lost their homes because of what they did," said Bonakdar.
Bonakdar says some of the employees are still trying to bounce back from the company's collapse, and says he believes for years Olguin and Soberal knew Bitwise was a Ponzi scheme for everyone involved.
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Bitwise founders federally charged in $100 million fraud scheme, began months earlier
"It's like the old saying, if its too good to be true it probably isn't and in Bitwise's case, not a bit of it was true," said Bonakdar.
Additionally, his clients have hope the justice system will deliver, but it's going to be a long road, and want the defendants to take some accountability.
"To the board of bitwise, and to these two CEOs, so-called CEOs, the time for atonement is now, do something, make these people you trampled whole, do it now," said Bonakdar.
As far as the class action goes, he says they are moving forward with hearings on the East Coast.
There will be a bond status hearing for Olguin and Soberal on December 8th and a preliminary hearing on January 25th.